OBECTIVES OF THE STUDY

•Identify the tax practices which are not aligned with the rules and regulations followed
by the BIR.

•Prepare a detailed discussion of areas of non-compliance with the existing rules and
regulations issued by the BIR and decisions of the Courts.

•Prepare recommendations addressing the issues identified on the conduct of the

review.

•Prepare analysis of reconciling items with notation of the tax treatment for income tax
purposes together with the corresponding basis and possible tax exposures that may
arise following the said tax treatment.

TAX IMPLICATION

The provision of the RMC 13-2013 Section 3, Pursuant to Section 13(2)(a) of P.D. No.
1869, PAGCOR is subject to a franchise tax of five percent (5%) of the gross revenue or
earnings it derives from its operations and licensing of gambling casinos, gaming clubs
and other similar recreation or amusement places, gaming pools, and other related
operations.

ADJUSTMENTS TO GROSS RECEIPTS

Quarter 2 Quarter 3
Soma CO.
Advance rents amounting to PhP 150,000 (not 150,000
reported during the previous quarter)
Security deposit amounting to PhP 85,000 (original 130,000
amount received is PhP 215,000)
Erina Corp.
Security deposit amounting to PhP 85,000 (original 175,000
amount received is PhP 215,000)
-17,758,675
Adjustment to Gross Receipts 455,000 -17,758,675

ADJUSTMENTS TO INPUT VAT for Quarter 4

Service Charge -1,412,471

Casino Operations -52,114,604
Understatement of Amortization of
Input VAT
Studio Room Expansion 1,000
Junior Suite Renovation 2,000
 Cabana Bathroom Installation 400
Adjustments to Input VAT -53,523,675

RECONCILIATION OF THE ANNUAL TAXABLE INCOME

Non-Gaming Operations
Net Income per books 8,313,223,192
Bank Interest Income - This refers to interest -42,842,024
income from banks already
subjected to final withholding tax (FWT).

Unealized Forex gains/losses -165,709,752

Advance rental -516,597

collected and
advance rental
applied this year

Accrued Bonuses 265,385,749

Accrued Sick Leaves 15,556,663
Accrued Leaves on 15,463,971
account of overtime
[Time in Lieu (TIL)]

Accrued Other Leaves 7,586,298

Provision for retirement expense 26,617,108

Financing Fees 4,553,673

Depreciation- Transportation 12,736,150
Interest Expense- Finance Lease 2,032,699,625
Adjusted Taxable Income 10,484,754,056

FORTUNE ATTACK

Adjustment to the taxable income needed in the amount of 57,903,608, for the casualty
losses that is supposedly non-deductible but claimed as a deduction.
CHARITABLE WORK

Under Presidential Decree No. 1869, the actual donations that a PAGCOR-accredited
company can donate must not exceed 2% of the gross gaming revenues from non-
junket operations.

Actual Donation Made 4,668,560

Limitations under legal provisions 26,029,288.18

Revenue Center Currency Amount

Non – high roller tables – Peso Ph P 687,364,825
High roller tables – Peso Ph P 200,363,300
Slot Machine Operations Ph P 159,652,725
Poker Tables Php 781,500
Poker Tournament Ph P 253,302,059
Total Gross Gaming Revenues from
non-junket operations 1,301,464,409
Limit 26,029,288.18

ADDITIONAL NON-CLAIMABLE DEDUCTIONS DUE TO INCORRECT

WITHHOLDING

WHT
Vendor Name Due
P
Bluegrass Entertainment Services h P 14,118

ECAM Talent Management 6,000

Erwin C. Parilla 16,500

Gagarin, Maria Christina Glean 14,400

Kits Entertainment Production 20,188

Perez & Associates Law Offices 25,650

 Talents Crib Artists and Event Management 9,518

Waid Architectural Design Services 415,200

P
TOTAL h P 521,574

Payment to 1st Eagle Guard 52,050,280

Payment to Professionals 5,215,740
Payment to Supplies 17,000
Total 57,283,020